Jobless claims climb to four-month high

New applications for benefits rise 28,000 to 385,000; Easter effect?

WASHINGTON (MarketWatch) — The number of Americans who applied last week for new unemployment benefits jumped to a four-month high, the Labor Department said Thursday, though much of the increase might reflect seasonal quirks related to the Easter holiday and spring break.

Still, the spike in claims could add to concerns that hiring in the U.S. may be tapering off. Other indicators have also hinted at a slowdown in job creation.

“Whether this is a genuine change in the trend or not, today’s data will undoubtedly only compound fears that growth is slowing significantly again,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

Initial jobless claims rose by 28,000 to a seasonally adjusted 385,000 in the week ended March 30, the Labor Department said Thursday. That’s the highest level since late November.

Economists surveyed by MarketWatch had expected claims — a rough gauge of layoffs — to drop to 350,000 from an unrevised 357,000 in the prior week. Yet the raw claims numbers were virtually identical for both weeks and also much lower, suggesting that the government’s seasonal-adjustment process exaggerated the increase.

The timing of the Easter holiday and spring break often make it harder for government statisticians to adjust claims at this time of year, a Labor official said. What’s more, California only gave an estimate of claims because of delays caused by the state’s Cesar Chavez holiday.

“A substantial chunk of this pop is technical,” said Stephen Stanley, chief economist at Pierpont Securities.

The four-week average of claims, which smooths out weekly volatility, also rose sharply, up 11,250 to 354,250, to mark a one-month high

Other signposts of a softer labor market have been visible in fresh reports from ADP and a monthly survey of U.S. service companies.

On Wednesday, payroll-handler ADP said net hiring in the private sector tapered off to 158,000 in March from 237,000 in February, marking the lowest level in five months. And a survey by the Institute for Supply Management showed that service-sector companies scaled back hiring plans in March, though they are still adding workers.

Getty Images

People walk into the job fair put on by Jobing.com as it opens at the Broward County Convention Center August 5, 2008 in Fort Lauderdale, Florida.

The apparent slackening in the labor market spurred a handful of Wall Street firms to drop their estimate for the official employment report in March that’s coming out Friday. Economists trimmed their target to 190,000 from 195,000, according to the most recent MarketWatch survey.

The economy has added an average of more than 200,000 jobs a month since November in a sharp acceleration from the end of last summer. Yet the latest signs of softness have raised the specter that hiring could peter out again as it did in the spring of both 2012 and 2011.

While Friday’s jobs report might add more clarity, it could take several months to determine if hiring is really slowing down or just experiencing the normal ups and downs of an economic cycle.

In the week ended March 23, meanwhile, continuing claims fell by 8,000 to a seasonally adjusted 3.06 million. Continuing claims reflect the number of people who already receive regular unemployment benefits. Most states typically offer 26 weeks of unemployment pay.

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